UNIT TWO

SCARCITY AND CHOICE:

THE ECONOMIC PROBLEM

ESSENTIAL VOCABULARY

1. Ability n – the state of being able to do something – здатність, спроможність.

Ability to borrow – спроможність брати в борг/кредитоспроможність.
2. Afford v (usually can/could afford) – to be able to spare or give up – дозволяти
собі.
3. As to prep – having relation to something – щодо, відносно, стосовно. Syn. as for,
about, concerning.
4. Available adj – being able to be used or can easily be bought or found – наявний,
що є в наявності, доступний.
5. Benefit n – something that promotes welfare – користь, вигода. Syn. an advantage.
6. Business n – an organization that produces or sells goods or provides a service –
компанія, підприємство. Business enterprise – торгівельно-промислове
підприємство, business firm – комерційна компанія, business unit – господарська/
організаційна одиниця. Syn. an enterprise, a firm.
7. Cost n – the price paid or required for buying, producing, or doing something,
usually measured in money, time, or energy – вартість; ціна. Syn. value. Аt no cost -
безкоштовно, money cost – грошова вартість, opportunity cost – альтернативна
вартість, cost of living/ living costs – прожитковий мінімум, cost of tuition –
вартість навчання.
8. Costs n – an amount that has to be paid or spent to buy or obtain something –
витрати, затрати. Syn. spending(s), expenditure(s).

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9. Face v – to come face to face with a difficult situation or problem one has to deal
with – стикатися, поставати перед. Syn. to be faced with.
10.Forgo v – omit or decline to take (something pleasant or valuable); go without –
відмовлятися, утримуватись від чогось. Syn. to refuse, to give up.
11.Increase v – to make or become greater in size, number, amount, value, degree,
price, etc. – збільшувати, зростати. Syn. to go up, to rise. Ant. to decrease, to lower,
to reduce.
12.Individual n – a person, considered separately from the rest of the group or society
that they live in – особа, людина. Syn. a person. Individuals – окремі особи, люди.
Syn. people.
13.Limit (to) n – a point that may not or cannot be passed – межа. To set a/the limit to
– встановлювати межу.
14.Limit (to) v – to stop something going beyond a particular point – обмежувати.
15.Opportunity n – a favourable, appropriate, or advantageous chance or prospect –
слушна нагода, сприятлива можливість. Syn. a chance, a possibility.
16.Option n – a choice one can make in a particular situation – вибір; право вибору.
Syn. an alternative, a choice.
17.Power n – the right to do something – право, повноваження. Borrowing power –
кредитоспроможність, taxing power/power to tax – право оподаткування. Syn.
authority.
18.Satisfy v – to cause someone to be happy from some desire or need by supplying
what he desires, or needs – задовольняти. Syn. to meet.
19.Scarce adj – being insufficient or in limited supply to meet the demand – рідкісний;
що рідко зустрічається; дефіцитний; недостатній. To be scarce – бути в
недостатній кількості. Syn. limited.

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20.Value n – the importance placed on something by an individual – цінність;
вартість. Forgone value – вартість, від якої відмовляються. To have value –
мати цінність/вартість. Syn. cost.

Text
The older we become, the better we understand that we can’t have everything. If we
spend more on lunch we have less to spend on dinner. If we live in the country, we enjoy
the beauties of nature but we spend more time to get to university or work. If a business
produces advertising materials, it can’t publish scientific journals with the same
resources. If a government spends more on modern medical facilities, it has to limit
costs on improvements of roads. So, it means that everyone through their lives has to
make choices from among the things they would like to have.
Most of the things we want or need are goods and services. Economists call them
economic goods since they are scarce and have value to people. Other goods are not
scarce – air, seawater, and sunshine – and called free goods. They are useful to people
and available at no cost.
Since most of the things are scarce all economic units, namely, individuals, families,
businesses and governments, have to choose as to how to allocate and use them. Choices
made by individuals and families depend on the size of their personal income, savings,
wealth and ability to borrow. Business enterprises and firms, in turn*, are limited by
their profits, savings and borrowing power, and governments by their taxing and
borrowing power.
The necessity to make a choice results from the problem of scarcity of available
resources. For most people, scarcity is a fact of life. Scarcity means that individuals as
well as societies want more than is available. If people desired nothing, there would be
no scarcity. If resources were great enough to produce more than anyone desired, there
would also be no scarcity. Economists say that there is no limit to the amount and kinds

3
of things that people want but there is a limit to the resources, available to satisfy
unlimited human wants. Thus, the problem of scarcity faces all people, businesses,
governments.
Having limited financial resources school leavers can choose a full-time or part-time job
as they can’t afford to get a university degree*. Business owners cannot hire all the
workers and buy all the equipment and raw materials they require. Governments face
some scarcity of finances despite their power to tax. Therefore, scarcity forces all levels
of decision makers*, from individuals to society, to do their best to get the most from
what they have.
The essential sense of scarcity is that everything we do has value. When you are doing
one thing, you are using time and resources that cannot be used for the next most
valuable thing you could have been doing*. The cost of doing more of one thing, then,
is the value that is sacrificed by doing less of something else.
Economists refer (посилаються) to the value that is forgone every time we do
something as opportunity cost. In fact, all costs are opportunity costs. We commonly
(звичайно,банально)think of cost as the money we spend to obtain something. But
spending money on one thing is giving up the opportunity to spend it on something else.
For example, you have been dreaming of buying a windsurfing and at last you have
accumulated enough savings to purchase it. But hydro cycle has become a thing of your
dream, too. But you cannot afford to purchase both desired things as you simply don't
have enough resources, namely, money. To the economist the choice you will make is a
trade-off. Trade-off means that the decision to have one thing is, at the same time, the
decision not to have something else.
Let's consider (розглянемо) the cost of acquiring (здобуття) university education.
Many school leavers think about going to university for four or five years. Obviously,
the cost of tuition, the cost of books and different supplies, and the cost of living in a
hostel represent the money cost of going to university.

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If a person does not go to college, then he or she will probably find a job instead.
Economists describe the money that those who choose university might have earned
(заробити)during their years of study as forgone earnings, but not the money spent on
tuition and books. Thus, the opportunity cost of going to university is the goods and
services represented by the money cost of the education, plus the value of the forgone
earnings.
The cost of doing something often has nothing to do with spending money. For example,
if you gave up the option of playing a computer game to read this text, the cost of
reading this text is the enjoyment you would have received playing the game. Most of
economics is based on the simple idea that people make choices by
comparing(порівнюючи) the benefits of options and choosing the one with the highest
benefit.
But there are two sides of the coin of opportunity cost. One is forgone value resulting
from scarcity, and the other is opportunity. There would be no opportunity costs without
opportunity. If there were only one thing you could do with your time and talents, there
would be no cost of doing it. The larger the number and the more valuable the
opportunities you have, the better this increases the cost of the choices you make.
So, the problems of scarcity, trade offs and opportunity costs are the main economic
issues that any economic unit faces.
We as individuals and as a society are faced with scarcity (of raw materials and financial
resources, of goods and services, of time, and so on) in relation to our ever-growing*
needs and wants. It is economics that helps make our choices (a new car or tuition fees,
more hospitals or more highways, more free time or more income from work) and gives
a way of understanding how to make the best use of available resources to achieve our
aims.

COMMENTS

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in turn – в свою чергу;
a university degree – університетський диплом;
decision makers – особи, які приймають рішення;
you could have been doing – ви могли б робити;
ever-growing – постійно зростаючий.

Exercise 1. Read, translate into Ukrainian in written form and memorize the definitions
of the following economic terms and concepts.
1. Economic goods: Any good or _____________________________________

service that is scarce in relation to _____________________________________

demand for them. _____________________________________
2. Free goods: “gifts of nature” that _____________________________________

are useful but are not scarce and have _____________________________________

no value to people. _____________________________________
3. Goods: all tangible items of value _____________________________________

that can be touched or felt. _____________________________________

4. Income: money of all kinds _____________________________________
received by a person or organization _____________________________________
in a year from work, investment, rent, _____________________________________
etc. _____________________________________
5. Need: what someone needs to have _____________________________________

in order to live a full healthy _____________________________________

comfortable life. _____________________________________
6. Opportunity cost(s): benefit, _____________________________________
profit, or value of something that must _____________________________________
be given up to obtain or achieve _____________________________________
something else. _____________________________________
7. Profit: money that an entrepreneur _____________________________________

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gains by selling something, or from _____________________________________
doing business in a particular period _____________________________________
of time after the production costs have _____________________________________
been met. _____________________________________
8. Resources: something that a _____________________________________
country, person, or organization has _____________________________________
and can use to achieve its/their goals. _____________________________________
9. Savings: the sums of money saved, _____________________________________

not spent but put aside for future use. _____________________________________

10. Scarcity: a situation in which _____________________________________

there is not enough of something to go _____________________________________

around. _____________________________________
11. Services: intangible items of _____________________________________
value in the form of labor, advice, _____________________________________
managerial skills, etc. _____________________________________
12. Trade-off: giving up one benefit, _____________________________________

advantage, etc. in order to receive _____________________________________

another that is more desirable. _____________________________________
13. Wants: a specific feeling of _____________________________________

needing something that is absent or _____________________________________

unavailable. _____________________________________
14. Wealth: a large amount of _____________________________________
money, property etc that a person or _____________________________________
nation owns. _____________________________________

Exercise 2. Give the Ukrainian equivalents for the following.

1. to enjoy the beauties of nature

2. improvements of roads
3. to have value to people
4. to result from the problem of ___________________________________

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 scarcity __________________________________
5. for most people
6. to satisfy unlimited human wants
7. all the equipment and raw materials
8. the essential sense of scarcity
9. the value that is sacrificed
10. to purchase both desired things
11. she will probably find a job
12. the value of the forgone earnings
13. by comparing the benefits of options
14. in relation to our ever-growing __________________________________

needs ____________________________________
15. the best use of available resources

Exercise 3. Find the English equivalents for the following.

1. медичне обладнання
2. впродовж свого життя
3. господарські одиниці
4. як розміщувати та _______________________________________
використовувати їх _______________________________________
5. дійсність життя
6. кількість та види речей
7. робота з повним та неповним _______________________________________
робочим днем _______________________________________
8. робити все від себе залежне, _______________________________________
щоб отримати найбільше з _______________________________________
9. наступна найважливіша річ
10.ми звичайно розглядаємо _______________________________________
вартість як _______________________________________
11.отримання університетської _______________________________________
освіти _______________________________________
12.на думку економістів
13.різне приладдя
14.не мати нічого спільного з
15.дві сторони медалі

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16.плата за навчання

Exercise 4. Match the verbs/verbal phrases, prepositions/adverbs and nouns/noun

phrases as they occur together in the text. Translate the expressions they make into
Ukrainian.

to be faced all people

to be limited a job
to depend the cost
to do up what they have
to face from among some scarcity of finances
to face from their profits, savings and borrowing power
to find with the option of playing a computer game
to get the most by the problem of scarcity
to give on the size
to increase the things
to make choices scarcity
to result your time and talents

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Exercise 5. Copy out from the texts the sentences containing the following words and
word-combinations and translate these sentences into Ukrainian.
1. a business produces
_____________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
______________________________________________________________________
2. all economic units _____________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_____________________________________________________________________
3. there is a limit to _______________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_____________________________________________________________________
_______________________________________________________________________
4. scarcity forces ________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

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_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
5. by doing less _________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
______________________________________________________________________
6. to have one thing ______________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
______________________________________________________________________
7. the money cost of the education __________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_____________________________________________________________________
8. with the highest benefit _________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

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_______________________________________________________________________
_____________________________________________________________________
9. the choices you make __________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
______________________________________________________________________

Exercise 6. What economic terms given in the text do the following definitions refer to?

B
1. a) Anything provided by nature or people that can be used in the

creation of goods and services to satisfy human wants.

2. b) What remains after the costs of doing business have been met.
3. c) Things purchased by consumers that do not have physical

characteristics.
4. d) A limit to the supply of production resources or consumer goods

in relation to producers’ or consumers’ demand for them.

5. e) Money or its equivalent received in exchange for labour.
6. f) Useful and scarce things desired by buyers.
7. g) The amount of goods and services that must be given up in order

to obtain other goods and services.

8. h) The study of how human beings and societies choose from among

scarce resources to satisfy consumers’ demand.

9. i) The total accumulated amount of income that is not spent on

consumption.
Exercise 7. Find in the box the English equivalents to the words listed below. More
than one is possible.
1.вартість (2)
2.вибір (3)

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3.вигода (2)
4.витрати (2)
5.відмовитися (3)
6.господарська одиниця (2)
7.задовольняти (2)
8.зменшувати (2)
9.кредитоспроможність (2)
10.люди (2)
11. намагатися (2)
12.недостатній (2)
13.особа (2)
14.підприємство (3)
15.право (2)
16.право оподатковувати (2)
17.обмежувати (2)
18. стикатися (2)
19.щодо (3)

an alternative an option a firm to give up individuals

to do one’s best as to/for limited the power value
a business unit to meet to limit to an advantage to forgo
the power to tax scarce cost the authority a choice
to face a person about an individual to reduce
an enterprise spending to refuse concerning to satisfy
to go out of one’s way people to be faced with the taxing power
the borrowing power to decrease to set a limit to a benefit
an economic unit expenditure an ability to borrow a business

Exercise 8. Replace the words or word combinations in bold type with their synonyms.

1. The cost of any choice is the option that any business unit gives up.
2. The opportunity cost of choosing one alternative is the value given up by not having
an advantage of the next best alternative.
3. For most people, the scarcest resource they face is time.

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4. All individuals, business firms and business enterprise, nations and governments are
faced with, scarcity one way or another.
5. Since time and resources are scarce, we must give up one opportunity in order to get
a benefit from another many times each day.
6. Since all available resources are limited in relation to all of people’s wants and needs,
people and nations have to come to decisions as to what goods and services they can
afford to buy and which ones they must forgo.
7. Productive resources that are used to satisfy one want cannot be used to satisfy
another at the same time.
8. Many things in life are scarce, and much of economics is concerned with the
problem of scarcity.
9. The opportunity cost is measured by what an economic unit – such as a society, a
business, a person – is nor doing but could be doing.
10.Choosing any scarce thing sets a limit to other choices.
11.Scarcity limits us both as individuals and as a society.

Exercise 9. Pair the halves of the sentences. Write your own list of the completed
sentences and translate them into Ukrainian.

1. Neither individuals nor societies can a. the inability to have as much as we

have want.
2. Businesses firms and enterprises are b. the resources necessary to satisfy
also faced with problem of those wants are limited.
3. There is a limit to the resources c. all the things they would like to have.
4. Since all available recourses are d. the foregone value of increased
limited, everyone needs spending on another program.
5. Scarcity takes place because human e. to make choices from among the
wants are unlimited but things he or she wants.
6. Having more of one means f. available to satisfy unlimited wants.

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 7. Since people’s values differ, g. there will be no economic problem.
8. Without scarcity, h. choices and opportunity costs.
9. The opportunity cost of government i. giving up a little bit of many others.
spending on a particular program is
10.No matter how much we have, we j. the opportunity cost of the same
face scarcity - decision may differ from person to
person.

Exercise 10. Translate the words in brackets into Ukrainian.

As an individual, for example, you (стикаєтеся з проблемою) of having only
(обмежених ресурсів) with which you can (задовольнити свої потреби та
бажання), as a result, you must (робити певні вибори) with your money. You'll
probably part of (ваших грошей на) you rent, electricity and food. Then you might use
the rest to go to the movies and/or (купити нові джинси). (Економісти) are interested
in the (виборами, які ви робите), and inquire into* why, for instance, you might
(обрати) to spend your money on a new DVD player instead of replacing your old TV.
They (хотіли б знати) whether you would still buy a carton of cigarettes if (ціни)
increased by $2 per pack. (найважливіша мета економіки) is to try to understand how
both (окремі люди та народи/країни) behave in response to certain material
constraints*.
inquire into* – досліджувати
material constraints* – матеріальна скрута

Exercise 11. Translate the text into Ukrainian.

Opportunity Cost
1. Opportunity cost is the value ________________________________________
of what is foregone in order to ________________________________________
have something else. ________________________________________

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2. This value is unique for each ________________________________________
individual. ________________________________________
3. You may, for instance, forgo ________________________________________
ice cream in order to have an ________________________________________
extra helping of mashed potatoes. ________________________________________
4. For you, the mashed potatoes ________________________________________
have a greater value than dessert. ________________________________________
5. But you can always change ________________________________________
your mind in the future because ________________________________________
there may be some instances ________________________________________
when the mashed potatoes are just ________________________________________
not as attractive as the ice cream. ________________________________________
6. The opportunity cost of an ________________________________________
individual's decisions, therefore, ________________________________________
is determined by his or her needs, ________________________________________
wants, time and resources ________________________________________
(income). ________________________________________

Exercise 12. Translate the sentences into English using the active vocabulary.

1. Нестача – основна проблема, з _______________________________________

якою стикаються усі суспільства. _______________________________________
2. Нестача означає, що в один і _______________________________________
той же час суспільство не може _______________________________________
повністю досягти всіх своїх цілей. _______________________________________
_
3. Нестача існує, тому що _______________________________________
природа не забезпечує нас усіма _______________________________________
ресурсами, необхідні для задово- _______________________________________
лення наших необмежених _______________________________________

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бажань. __
_______________________________________
_
4. У світі нестачі неможливо _______________________________________
отримати щось безкоштовно. _______________________________________
5. Кожен стикається з пробле- _______________________________________
мою обмежених ресурсів, щоб _______________________________________
задовольнити свої бажання та _______________________________________
потреби. _______________________________________
__
6. Поняття “альтернативна _______________________________________
вартість” стосується як окремих _______________________________________
осіб, так і підприємств та уряду. _______________________________________
_
7. Проблема нестачі, вибору та _______________________________________
альтернативної вартості – це _______________________________________
важливі економічні проблеми, які _______________________________________
постають перед будь-якою _______________________________________
господарською одиницею. _______________________________________
___
8. Оскільки люди не можуть собі _______________________________________
дозволити мати все, вони змушені _______________________________________
робити вибір серед речей, які _______________________________________
вони хотіли б. _______________________________________
__
9. Оскільки людські бажання _______________________________________
необмежені, а ресурси наявні для _______________________________________
їх задоволення обмежені, ми _______________________________________
повинні робити вибори щодо _______________________________________

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того, як використовувати ці ______________________________________
ресурси. ______________________________________
10.Існує межа кількості наявних _______________________________________
ресурсів, але не існує межі _______________________________________
людським бажанням. ______________________________________
11.Альтернативна вартість пев- _____________________________________
ної речі – це вартість того, від _____________________________________
чого ми змушені відмовитись, _______________________________________
щоб отримати саме цю річ. _______________________________________
12.Рішення мати якусь річ є в той _______________________________________
же час рішенням не мати чогось _______________________________________
іншого. ______________________________________
13.Особистий прибуток, заощад- _______________________________________
ження, спроможність брати в борг ______________________________________
впливають на вибір, який роблять ______________________________________
люди. ______________________________________

Exercise 13. Answer the following questions.

1. What do people realize going through their lives?

2. What are economic goods and free goods? Is there any difference between economic
goods and free goods? If yes, how do they differ?
3. Why do all economic units have to make their choices?
4. What does individual choice depend on?
5. What are governments and businesses limited by?
6. What makes everyone choose?
7. What does the necessity to make a choice result from?
8. What is scarcity?
9. What problem does everyone in any society face?

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10. Why cannot individuals, businesses and governments afford to have all the things
they would like to have?
11. Why does scarcity force all decision makers to arrive at best decisions?
12. How do economists explain the essential sense of scarcity?
13. What is the opportunity cost?
14. What is its essential sense?
15. What is the money cost of going to university?
16. What are forgone earnings?
17. Why do anyone who goes to university face the opportunity cost? What costs do the
opportunity cost involve? Why does the cost of doing something have nothing to do with
spending money in most cases?
18. Why should people compare benefits before making their decisions?
19. Why does the cost of doing something have nothing to do with spending money in
most cases?
20. Why should people compare benefits before making their decisions?
21. What are the two sides of opportunity cost?
22.What is the relationship among scarcity, choice and opportunity cost?

Exercise 14. Text for additional reading and discussion.

In economics there is a saying: "There's no such thing as a free lunch". It means that
nothing is really "free" because we use resources that could have been used for
something else. We live in a world of scarce resources and unlimited wants. The concept
of scarcity is essential to the field of economics. With scarcity come choices. Economics
deals with how people and society make choices under conditions of scarcity, as well as
the individual and social consequences of these choices. Economics is concerned with
the analysis of this decision-making process. To make efficient decisions - decisions that
provide the greatest possible earnings from the resources available -, people and society

19
must consider the benefits and costs of using their resources to get more of some things,
and less of others. The reality is that we cannot have everything that we want. We must
choose which of our desires we will meet and which we will leave unsatisfied. So, faced
with scarcity, individuals, government and society must make choices.
Choosing any scarce thing sets the limit on other options. To the economist such
foregone options are opportunity cost. Suppose you drive a car. Buying an extra gallon
of gasoline may prevent you from buying an extra piece of pizza, but purchasing the
pizza instead of the gas may force you to drive less and walk more. Economists view
opportunity cost as the value of the next best option forgone when a choice is made.
You make different choices every day as well. Choices involve a trade-off of the value
of one opportunity against the value of its best alternative. Are there any additional
benefits and costs of studying economics rather than listening to music or meeting
friends, or sleeping? Is watching TV the best use of your time? Is working at a fast-food
restaurant better than the best alternative job or some other use of your time? Will you
graduate the university? (Potential benefits include higher lifetime income, meeting
interesting people, and the joy of learning; costs include expenditures for tuition, books
and different supplies, the hard work in classes, and the income you could be making
right now.) Where will you live and work? Will you marry? (Marriage involves both
financial and psychological costs and benefits.) Will you have children? If so, how
many? How will you spend your limited income? Decisions about these and other
economic choices will create the course of your life.
For most people opportunity cost is measured by the money paid to produce or acquire
goods, but opportunity cost is ultimately personal and involve far more than money
alone.
Have you ever estimated the cost of your education? Consider the value of your time.
Instead of studying and attending class, you could get a full-time or part-time job. You
may be giving up better food and clothes, a nice car, and a comfortable apartment. The

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values of all forgone alternatives are the true costs of education. But suppose you quit
school. The costs of your nice car, apartment, food, and clothing would include the
forgone enjoyment of learning and campus life, and the higher future income and
consumption your university degree might have made possible.

Questions for economic reasoning and discussion

1. Assume that you have just received your first pay of 530 hryvnias. Describe how the
concepts of scarcity, opportunity costs and the need to make choices will affect the way
in which you are going to spend your money.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
2. One of the scarce resources that direct our behavior is time. Each of us has only 24
hours in a day. How do you plan to allocate your time in a given day among
alternatives? How do you consider the alternatives? Once you choose a most important
use of time, why not spend all your time on it? Use the concept of opportunity cost in
your answer.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

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3. If you happen to drop out of the university, what things will change in your life?
What, then, is the opportunity cost of your education?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
4. What is the difference between scarcity and poverty? If everyone in the world had
enough to eat, could we say that food was no longer scarce? Can the problems of
scarcity and poverty be solved?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

5. Choose the right variant. Only one is possible.

1. Scarcity
a. is the inability to satisfy all our wants.
b. leads to higher prices.
c. applies only to people living in poverty.
d. is not something that affects very rich people.

2. Which of the following statements is true?

a. Human wants are scarce but resources are limitless.
b. Human wants are limitless and resources are limitless.
c. Resources are scarce but human wants are limitless.

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 d. Resources are limitless but human wants are scarce.

3. Scarcity requires that we

a. produce efficiently.
b. learn to limit our wants.
c. make choices about what goods and services to produce.
d. have unlimited resources.

4. If Jon effectively uses available resources to satisfy wants, we say he

a. does not face opportunity costs.
b. makes a rational choice.
c. does not compare costs and benefits.
d. does not respond to incentives.

5. Economic choice and competitive behavior are the result of

a. basic human greed - жадоба.
b. poverty.
c. private ownership of resources.
d. scarcity.

6. What is opportunity cost?

a. Opportunity cost refers to costs that cannot be avoided, regardless of what is
done in the future, because they have already been incurred.
b. Opportunity cost is the value of what we give up by not making the alternative
choice.
c. Opportunity cost is a cost associated with the allocation of abundant resources
among alternative uses.

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 d. Opportunity cost is a monetary measure of cost that takes into account only
explicit costs (явні витрати), or costs that can be counted.

7. The highest-valued alternative that we give up to get something is the

a. incentive.
b. benefit.
c. opportunity cost.
d. costs.

8. The following is a rank ordering of how Ann would prefer to spend her time this
evening: (1) study economics, (2) go to a concert, (3) do laundry, and (4) exercise. If
she chooses to study economics, what is the opportunity cost of studying?
a. The benefits she forgoes by not going to the concert.
b. The sum of going to a concert, doing her laundry, and exercising.
c. Zero.
d. None of the above.

9. What economic fact prevents a hypothetic (гіпотетичний) nation from eliminating

poverty?
a. Everyone in a hypothetic nation has plenty of money.
b. Scarcity.
c. Everyone in a hypothetic nation is poor.
d. People in a hypothetic nation are satisfied with their current standard of living.

10.Economics is a social science that studies the choices that individuals, businesses,
governments, and entire societies make in the presence of
a. scarcity.

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b. necessity.
c. efficiency.
d. poverty.

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